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New Place Based Income Management to commence 1 July

Posted 29/06/2012 by Luke Buckmaster

A new form of income management being introduced next week will extend welfare quarantining to selected disadvantaged areas across Australia, targeting people involved in child protection matters and deemed vulnerable to financial hardship.

From 1 July, the Government will introduce a new form of income management to communities in Queensland, New South Wales, Victoria and South Australia.

So, how will the new Place Based Income Management operate and how does it differ from existing forms? Why base it in particular areas? What do we know about whether or not it is likely to be successful?

Place Based Income Management will apply in the following Local Government Areas (LGAs):

Bankstown, New South Wales

Logan, Queensland

Rockhampton, Queensland

Playford, South Australia

Greater Shepparton, Victoria.

The Government says that, ‘these sites were chosen based on a number of factors, including unemployment levels, youth unemployment, skills gaps, the numbers of people receiving welfare payments, and the length of time people have been on income support payments’.

Place Based Income Management will apply to:

parents who are referred by state or territory child protection authorities—this will apply ‘in cases where it is considered to be a useful tool in addressing child neglect and building life skills’ and

people assessed by Centrelink Social Workers as being vulnerable to financial crisis—for example ‘people referred to a Centrelink Social Worker by public housing authorities because they are at risk of homelessness due to rental arrears’.

As with existing forms of income management, people will be able to particpate voluntarily in the Place Based scheme.

Under the Voluntary Income Management and Vulnerable Welfare Recipient components, 50 per cent of a person’s welfare payments will be income managed, while 70 per cent will be income managed under the child protection component. People subject to the Place Based approach will have access to new support services aimed at improving financial literacy and budgeting.

Why a place based scheme?The origins of Place Based Income Management are in the 2010 changes to the Northern Territory Emergency Response (NTER) introduced by the Rudd Government. In order to meet an election commitment to restore the operation of the Racial Discrimination Act in the Northern Territory, the Government needed to develop a form of income management that did not apply only to remote Indigenous communities in the Territory. It did so by introducing a 'race neutral' scheme, first introduced throughout the Northern Territory but intended to be national in scope. It would extend beyond prescribed Northern Territory communities and hence was intended to operate alongside the RDA.

According to the Explanatory Memorandum for the relevant legislation, the new model of income management was ‘to be used in selected locations throughout Australia, in relation to people who meet objective criteria independent of their race or ethnicity’. As such, the idea of a national scheme, based in selected locations, was closely linked to the Government's objective of restoring the Racial Discrimination Act. For an examination of this and related issues, see the Parliamentary Library Background Note, Income management and the Racial Discrimination Act.

There is also support for place based approaches in recent research on poverty and disadvantage. This research suggests that disadvantage across a wide range of indicators tends to be concentrated in a relatively small number of geographical locations, and that these concentrations of disadvantage tend to persist over time and are possibly becoming worse. In response to such evidence, a range of place based policy initiatives have emerged across different levels of government.

Income management can be seen as an example of the increasing focus on disadvantage in particular locations. Even where it has been based on a sectoral approach (such as child protection) this has been focused on specific locations where problems are thought to be particularly acute.

Will it work? As argued in a recent Parliamentary Library Background Note evaluating the evidence relating to income management, thus far, the evidence provided for or against income management is inconclusive.

The Child Protection form of income management in Western Australia operates in a similar way to that intended for the Place Based scheme. Survey findings from a 2010 evaluation of the Western Australia scheme included:

49 per cent of respondents on Child Protection Income Management thought it had made their children’s lives a lot better and 12 per cent a bit better; 33 per cent thought it had not made much difference to their children’s lives; and 7 per cent thought that it had made their children’s lives a bit worse

Stakeholders (including Centrelink staff, Department of Child Protection staff, financial counsellors, money management advisers and peak welfare and community organisations) were also surveyed as part of the evaluation. Among other findings, they identified both positive and negative possible outcomes of both compulsory and voluntary income management that they thought may emerge in the future. On the positive side, these included improved budgeting and financial management skills and improved individual and family wellbeing. On the negative side, these included the possibility that people would become dependent on the system and not be able to manage their finances without remaining on income management and misuse of the BasicsCard (the pin protected card used for making purchases on income management).

There is also some evidence (p. 40) from the Northern Territory which appears to indicate that a significant proportion of women on income management in urban and near-urban areas, in which those on income management are the minority, felt stigmatised by having to use the BasicsCard. This may be replicated in the case of Place Based Income Management, given the fact that it will apply in urban and near-urban areas.

More generally, a number of problems have been identified with place-based approaches. One is that Australia’s population is highly mobile even across disadvantaged regions. This presents problems for both service delivery and measuring whether change has occurred—that is, whether or not interventions have been successful. In relation to measurement, a recent review of placed based approaches has noted that the high rate of mobility means that ‘any comparison of area level statistics over time are likely to, at least in part, be comparing outcomes for a different group of people’.

A range of further information relevant to income management can be found in the Parliamentary Library Background Note, Income management: an overview.